Final answer:
Dual agency in business refers to an agent who represents both the buyer and the seller in a transaction, which requires disclosure and may lead to a conflict of interest. In competitive markets, parties must be well informed and free to act independently.
Step-by-step explanation:
Dual agency refers to an agent who represents two parties in a transaction. This means the agent acts on behalf of both the buyer and the seller in a real estate deal, for example. It is important that both parties agree to this arrangement as it can lead to a conflict of interest. Dual agents have a duty to treat both clients fairly and disclose the dual agency relationship. Furthermore, in the context of competitive markets, it's essential to understand that buyers and sellers act independently and must be well informed of market conditions, which means each party needs comprehensive information to make informed decisions. Additionally, both parties' ability to enter and exit the market freely is a fundamental assumption in competitive market theory.